# Acn203S

Topics: Variable cost, Costs, Cost Pages: 9 (1484 words) Published: October 11, 2012
ACN203S Discussion class – 2nd semester 2012

ACN203S
Questions to be discussed will be from the first semester (TL101 2012) 8:30 – 12:00
(Classes will be presented only in English)

ACN203S LECTURERS

Telephone nr’s: RK Nzhinga (Mr) JM Verster (Ms) Y Reyneke (Mrs) E-mail address: ACN203S-12-S2@unisa.ac.za 012 429 6937 012 429 4767 012 429 4046

GENERAL MATTERS: EXAM FORMAT

- 100 marks - 2 hours - 5 Questions (20 marks each) - Previous exams uploaded on MyUnisa. - Do not spot! - English & Afrikaans available to student

TOPICS TO BE DISCUSSED: 1. Process Costing 2. Direct and absorption costing 3. Standard Costing

PROCESS COSTING
INPUT

W-I-P

LOSSES
Normal & abnormal

OUTPUT

Process costing - statements

3 Process cost reports:
1) 2) 3) Quantity statement (also called production statement) Production cost statement Cost allocation statement (also called allocation statement)

Process costing – methods of stock valuation

-The weighted average method
-FIFO-method

“What’s the difference?”

Process costing – methods of stock valuation
1. QUANTITY STATEMENT FIFO: Opening work in process (units) kept separate from units started and completed in the current period. WAM: All units completed and transferred out are treated identically (opening WIP and units started and completed are combined in the output column).

Process costing – methods of stock valuation
2. PRODUCTION COST STATEMENT

FIFO: Only uses current period costs per equivalent unit.
WAM: All costs incurred (this period and prior period) are added together to find total costs for equivalent units produced. 3. ALLOCATION STATEMENT The position of the normal loss allocated to units completed and transferred differs. Note: Disclose opening costs separately under FIFO.

Quantity statement format (WAM)

Quantity statement format (FIFO)

Quantity statement - steps to follow

Step  Fill in the inputs (Normally given in the question)

Quantity statement - Step 

Does not depend on stock valuation method or wastage point.

Quantity statement - steps to follow

Step  Total input = output (Everything put into the process must be accounted for)

Quantity statement Step 

Quantity statement - steps to follow

Step  Fill in the output-unit column (WAM vs FIFO)

Quantity statement - Step 
WA
(25%) Input (units) 1 600 3 400 Details Work-in-process (1 February 2011) Put into production Completed and transferred Normal loss Abnormal loss Work-in-process (28 February 2011) Output (units)

2 500 500 1 200 800 5 000

5 000

FIFO
(25%) Input (units) 1 600 3 400 Details Work-in-process (1 February 2011) Put into production Completed from: - Opening stock - Current production Completed and transferred Normal loss Abnormal loss Work-in-process (28 February 2011) Output (units)

1 440 1 060 2 500 500 1 200 800 5 000

5 000

Quantity statement - Step 
Look for: O/s Conversion % C/s Conversion % Stock valuation method Where wastage occurs

Quantity statement: output column Calculation of normal loss (always start with the total of the input columns; apply the two separate rules): Rule 1: If O/s Conversion % >= WP, EXCLUDE O/s from calc. Rule 2: If C/s Conversion % < WP, EXCLUDE C/s from calc. O/s for FIFO: If rule 1 is false (i.e. O/s was included in calc. of NL, decrease O/s in output column)

Quantity statement - steps to follow

Step  Fill in the EQUIVALENT UNITS: WIP opening
(What still needs to happen in current process?)

WIP closing
(What has already happened in the current process?)

Quantity statement - Step  Equivalent units
Output O/s (FIFO) Current production (FIFO) / C+T (WAM) C/s AL NL Equivalent units 100% - % of completion 100% % of completion M 100% C WP If C/s Conversion % >= WP: Zero If C/s Conversion % < WP: Do as for AL

Quantity statement - Step  Equivalent units
25%; weighted average method

Quantity statement - Step  Equivalent...